When to Refinance on a Duplex

[Michael Craig]

I am currently house hacking in a live-in flip duplex. The downstairs unit is completely renovated and generating market level income. The upstairs unit, where I currently live, is being renovated. At the current renovation rate, I should have the upstairs unit completed by May 2020. 

I would like to take advantage of the low interests rates today, however, I am teetering at at the 80% LTV point with the current condition of the house. Do I:

-Refinance now out of my FHA into a conventional mortgage to take advantage of the better interest rates and risk paying mortgage insurance (which drops once I reach 80% LTV)

-Keep paying the high rates and refinance once the renovations are complete

-Utilize a third option 
 

[Chris Levarek]

@Michael Craig On duplexes, I've only been able to get 70% LTV or 75%LTV on an investment property. Perhaps, I'm misunderstanding but I would say the rates will not vary that much by the time you get the value up. I'm more in the Buy and Hold so I think long term, meaning execute the plan fully to be able to pull out the max amount of equity to continue the long term play. No point in getting a good rate that doesn't cash flow long term anyway due to some type of PMI.

@Aline Zamora Typically you will find 20 year loan amortizations with commercial lenders for properties under a LLC name. This can often skew the numbers if originally calculated at 30 year amortizations or residential financing. I suggest, having an umbrella insurance policy on the property if it is in your name for loan purposes. The umbrella insurance policies are common action in this case and adequate protection on these small properties.